The Northern Territory and federal governments are facing pressure to put together a rescue package for the ­loss-making Gove alumina refinery in Arnhem Land after owner
Rio Tinto
dumped plans to switch the site’s fuel source to gas, increasing the likelihood it will be closed with the loss of up to 1500 jobs.

Rio’s board is expected to make a final decision on the plant’s fate at a board meeting in Australia within days.

The miner said on Tuesday that “deteriorating market conditions" amplified the “challenges" of the operating environment for the plant, which is struggling with high costs, a strong dollar and low alumina prices.

Australian Workers Union national secretary
Paul Howes
said the shutdown of the refinery, the biggest private employer in Arnhem Land, would be an “economic catastrophe" for the region and the territory and said the plant was “too big to fail".

But federal Industry Minister
Ian Macfarlane
said the government had “concluded" its discussions with the NT government and energy suppliers on gas supplies and signalled the ­decision was now out of the ­government’s hands.

“It’s now up to Rio Tinto to make a final decision about the future of the refinery," Mr Macfarlane said.

NT Chief Minister Adam Giles also appears to have run out of options after being advised by Rio Tinto that gas supply was not the problem for the plant.

“We still sit here with our fingers crossed that the refinery will continue to operate," Mr Giles said. “We are not oblivious to the commercial reality about decisions that need to be made on a commercial basis but we’d like to see the ­refinery continue."

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The threat of closure has been hanging over the Gove plant, said to be losing $30 million a year, for more than 12 months. Rio has had several options under consideration for the site, including temporarily scaling back production until conditions improve, shuttering the refinery and relying only on bauxite exports from Gove, or switching the site to run on gas, which would help cut losses.

No reason plant can’t survive: Howes

But Rio said on Tuesday that the gas-switching plan was no longer an option, however much gas was available from the NT government and other sources.

“Rio Tinto has informed the Northern Territory government and the ­Australian government that no final decisions have been made," a ­spokesman said.

“Under all scenarios, bauxite mining operations are planned to continue."

Mr Howes said he could see no reason why a territory and federal rescue package could not be put together for Gove similar to the one that extended the life of Alcoa’s Point Henry aluminium smelter in Victoria in 2012. “I’ve seen these issues before in aluminium in particular where the company has said it has made up its mind but intervention at the last moment has changed it," he said.

Mr Howes said the union was seeking an urgent meeting with both Mr Macfarlane and Mr Giles to galvanise further efforts to prevent the site closure. But Mr Macfarlane’s office said late on Tuesday that no further talks were planned.

In a letter from Rio Tinto Australia managing director
David Peever
to Mr Giles on November 19, Mr Peever said Rio was “still considering options" for the future of the refinery and was “aware of the need to provide clarity on the way forward at the earliest ­practical opportunity’’.

“We expect a decision is not too far away," Mr Peever wrote in response to a letter from Mr Giles to Rio chief executive Sam Walsh the previous week.

In the letter Mr Peever acknowledged the “very significant efforts" Mr Giles, the NT government and the federal government had made to aggregate enough gas to switch fuel source.

“At this time, there is nothing more that could reasonably be expected to be done by either government to support the business case for gas," Mr Peever wrote.